8 May, 2016
Survey of ASEAN Regulations
Applicable Regulatory Body and Market Information
The State Securities Commission of Vietnam (“SSC”)
Ho Chi Minh Stock Exchange (“HOSE”), and Hanoi Stock Exchange (“HNX”) are regulatory bodies of which SSC is the principal regulator.
373 listed companies Hanoi Stock Exchange (HNX):
Market Capitalization of approximately VND 150,983 billion/ USD 6.7 billion as of 2/12/15.
314 listed companies Ho Chi Minh Stock Exchange (HOSE) as of 2/12/15.
Market Capitalization of VND 985,258 billion/ USD 43.7 billion as of 2/12/15.
Securities Offering and/or Registration and Exemption Requirements
In Vietnam, an offer of shares to the public by a joint-stock company is different from the listing of the shares of such company on a stock exchange. There are two stock exchanges, namely, HOSE (in Ho Chi Minh City) and HNX (in Hanoi). Below are the main requirements for the offer and the listing of securities (including shares and bonds) of a foreign issuer in Vietnam:
For the offer of shares to the public, a foreign issuer must meet the following requirements:
- The shares must be denominated in Vietnam dong (“VND”);
- Business and production operations in the year immediately prior to the year of the public offering were pro table in accordance with international accounting standards;
- There is an investment project in Vietnam which is approved by the Vietnamese authority(ies) and a plan for the issue and utilization of proceeds for the project development;
- The total amount of money raised from the sale offer must not exceed 30% of the total investment capital of the project;
- There is an undertaking to underwrite the issue in the form of a rm commitment from at least one Vietnam-based securities company;
- There is a bank supervising the utilization of proceeds;
- The foreign issuer must undertake that it will not remit the sale proceeds offshore, and will comply with the law on foreign exchange control in respect of issue of securities in Vietnam (i.e., opening and maintaining a VND-denominated bank account at a Vietnam based licensed bank, all the proceeds and payments in relation to the issue must be made via this bank account); and
- There is an undertaking from the general meeting of shareholders in the case of public offers of convertible shares or convertible bonds (or an undertaking from the board of management35 or the members’ council36 in the case of public offers of bonds) to trade the securities on a stock exchange within one year from the completion date of the sale.
For the listing of bonds, a foreign issuer must meet the following requirements:
- The bonds must be denominated in Vietnam dong;
- The bonds have already been approved for public sale in accordance with the law on securities of Vietnam;
- The number of to-be-listed bonds is same as that that permitted to be sold to the public;
- Having satis ed the conditions for listing in either HOSE or HNX;
- The listing company provides an undertaking to fully discharge all its obligations in accordance with the law of Vietnam;
- Having been consulted by a securities company established and operating in Vietnam for listing of the bonds; and
- Complying with the law of Vietnam on foreign exchange control.
To our knowledge, there has not been any successful offer for sale to the public and listing of securities by foreign
issuers in Vietnam so far.
Marketing of Securities Where Issuer/Sponsor Offshore and Investor Onshore
No specific rules are available. Rather, general rules for domestic issuers are applicable to foreign issuers. In particular, an issuer is prohibited from the following:
Directly or indirectly engaging in any act of cheating, deception, or making any untrue statement or omission of necessary information that would cause material misleading and in uence the activities of public securities offering and listing;
Making disclosure of untruthful information in order to incite or entice other persons to buy or sell securities, or making disclosure of insuf cient or untimely information that seriously affects the securities price in the market; and
During the time the SSC reviews the offering registration dossier, the issuer may only use the information described in the prospectus submitted to the SSC to explore the market, provided that it must specify that the information on the date of issue and the securities selling price is a proposal only. In addition, the exploration of markets must not be conducted through the mass media.
Need to Engage Onshore Sponsor, Licensed Placement or Other Distribution Agent
Please see previous section “Securities Offering and/or Registration and Exemption Requirements”.
Legends or Other Disclosure Requirements on Offering Materials
The SSC is empowered to consider and grant the Certi cate for Public Securities Offering. In case of refusal, the SSC must explain in writing.
A Certificate for Public Securities Offering granted by the SSC certi es that the public securities offering has been duly registered in accordance with the Vietnamese laws.
Within seven calendar days from the date of the Certi cate for Public Securities Offering, the issuer must publish the Announcement of Offering in three consecutive issues of a newspaper.
The distribution of securities may only be made after the issuer ensures that securities buyers are able to access the prospectus.
Other Relevant Considerations
The actual public offering or listing of securities by a foreign issuer in Vietnam may be more dif cult than what the laws require, because it runs against the general policy of Vietnam for attracting foreign investment into Vietnam (rather than a reverse course in which capital from Vietnam ows to a foreign issuer).
To view the complete guide, please click here.
35 A board of management in a joint-stock company under Vietnamese company laws is somewhat similar to the board of directors in other jurisdictions.
36 The term “members’ council” under Vietnamese company laws denotes the council of all shareholders in a limited liability company.
For further information, please contact:
Thomas J. Treutler, Partner, Tilleke & Gibbins
thomas.t@tilleke.com
